HOT COMPANY PROFILE: Social gifting service Wrapp

Bridging the gap between online and offline retail

With consumers increasingly shifting their shopping habits online, some brick-and-mortar retailers are feeling the pressure, with Game and Blockbuster notable examples. Social gifting service Wrapp aims to bridge the gap between online and offline retail and drive some commerce back to physical stores by enabling consumers to give either part-paid or free gift cards to friends via Facebook. Backed by LinkedIn CEO Reid Hoffman and Skype founder Niklas Zennström, the Swedish firm is ramping up its expansion in the wake of the emergence of a Samwer Brothers clone, DropGifts, and Wrapp CEO Hjalmar Winbladh  tells StrategyEye that the firm is well placed at the intersection of mobile, social and commerce to grow in the coming months. 

¤ What differentiates Wrapp from similar firms?
Wrapp is a new social gifting service that reinvents how people are socialising around gift cards and how to give gift cards to each other. It’s tapping into the big mega-trends right now when it comes to internet – the social graph, improving smartphone platforms, and actually transforming the gift card industry into a sales acquisition tool for retailers, where retailers can reach out and give away free or paid gift cards in a way to drive people into their stores.

We launched in Sweden in November, and more than 1 million gift cards have been sent in the country from 150,000 active users. Sweden’s a small market, 9 million people, so we’ve been growing very rapidly there, and we launched in UK two weeks ago working with Karen Millen, Oasis, Pizza Express, First Fitness and some others. It’s starting to pick up – it’s a viral service; it starts slow and then accelerates. Then we launched in Norway and we’re going to launch another couple of European markets over the next couple of weeks, and then US.

¤ What is your business model?
Wrapp is a way for mainly brick-and-mortar retailers to drive sales into the brick-and-mortar stores in a performance-based, very targeted way. When the sales occur in the store, we take a fee. We are completely aligned with the retail partners that we work with, so when they earn money we earn money. All the advertisement that actually happens on the Facebook wall and when people are giving each other gift cards, with all the likes and comments around that, is completely free for the retailers.

¤ Who are your main competitors?
We invented this space, as using social gifting as a way to drive sales for stores. And today we don’t really have competitors in a way that we can see, that are rival businesses – but we have a clone [DropGifts]. But if you look at their numbers right now, they’re so small. Of course, it’s a bit frustrating to have someone pretty much copying you straight off, but being two or three releases behind you in terms of innovation. I think as long as we align ourselves more with the retailers and keep on evolving the product and innovate the products, I do believe that we can stay ahead of those guys.

¤ What’s the biggest challenge you currently face?
Our biggest challenge is of course being a startup, and what that means in terms of scaling a business and doing it globally. And of course entering into markets like the US and UK, which are very big, mature markets for these kind of services. Then of course to get the trust from the retailers that we will be a trustworthy partner to them, and that we will not do any retail business ourselves or anything that competes with the retailers. Because the data we aggregate together with the retailers of course has to be used for the benefit of the retailer, nothing else.

¤ What do you think is the hottest trend in digital media?
Tapping into the social graph and the opportunity around that is actually the future of marketing, where you let your fans be your best marketers, to help you drive. And you need to reward them for doing that, as well. So it’s a very interesting space, and we’re just in the beginning.

VERDICT
The opportunity for social and mobile-related commerce currently looks large and by harnessing the gift card culture and bringing it into the digital age, Wrapp appears to be well-placed to create a niche for itself, despite the emergence of DropGifts. Perhaps the firm should take pride in the fact that the Samwer brothers have targeted it, when the trio usually clone more established, mostly US firms.

While there are many ways that Wrapp could expand its offering as the service gains traction, Winbladh is understandably wary of alienating the company’s retail partners, insisting that the firm will not enter retail itself and will be responsible with its consumer data. However, online coupons and working with partners to offer daily deals leveraging Facebook’s social graph could prove a shrewd move in the future, with recent research from Sociable Labs claiming that social sharing influences two-thirds of consumers.

However, for now, with more than 1 million vouchers shared in a little more than three months in Sweden, it appears that there is consumer demand to disrupt the giftcard space, and with bricks and mortar retailers struggling to get consumers through the door in the age of Amazon, Wrapp should find no shortage of retail partners seeking to work with it as it continues to expand.

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